Iowa Loan & Trust Co. v. Citizens State Bank ( 1925 )

Morling, J.

Plaintiff purchased the note and mortgage for $4,000, April 19, 1919. "Whether the purchase was made from defendant is disputed. An inspector’s report accompanying the loan papers stated that the value of the land, exclusive "of buildings, was $8,000. On February 4, 1921, plaintiff wrote to defendant that the property was trading property, and plaintiff had been obliged to commence foreclosure, and that the tenant stated that the farm was very poor, and not worth to exceed $1,000, and ‘ ‘ if this should prove to be a very poor piece of .land we will expect you to protect our interest in this matter. Let us hear from you as to what you know personally in regard to this farm. ’ ’

Correspondence followed, in which defendant related to plaintiff the information which it had about the land, expressed its confidence in the correctness of such information, and stated:

“Best assured we have no desire to evade any responsibility on this and we will do everything in our power to give you the right kind of co-operation.”

On February 8, 1921, plaintiff wrote to defendant, expressing the hope that there was no mistake about the statements made by defendant, and: .

“I apprehend Mr. Dunwoody [the mortgagor] will not set up any defense and we will have no trouble in taking a decree at the present term of court. If you have any further information in regard to this land from time to time I wish you would advise us of the same.”

Plaintiff got judgment of foreclosure March 25, 1921, bid in the property at foreclosure sale on June 11, 1921, for the full amount of the judgment, principal, interest, attorneys’ fees, and costs, afterwards paid taxes, and, On June- 11, 1922, took sheriff’s deed. Apparently on November 3, 1922, plaintiff again brought up the matter of the alleged misstatements. Defendant replied, again expressing doubts as to the truth of plaintiff’s information, and stating its purpose to make a thorough investigation. This suit was brought January 25, 1923. Plaintiff in its petition “tenders to the defendant a certain deed executed by plaintiff conveying to defendant” the mortgaged property. We do not find that the deed was brought into court or tendered or offered in evidence.

Plaintiff produced the testimony of Wo witnesses to the untruthfulness of the representations; the defendant, that of five, to prove their truthfulness. None of them gave very persuasive evidence, and the burden of proof is upon the plaintiff.

There was testimony that the mortgagor Avas solvent at the time of the execution sale.

The suit is to cancel the original purchase of the note and mortgage, is not for damages, and is not based upon subsequent transactions.

There are three reasons Avhy this suit cannot be maintained: First. The evidence does not prove the falsity of the representations. Second. As early as February 4, 1921, the plaintiff was PW ^s ©lection whether to rescind or affirm> ^ by. thereafter taking judgment on the note and decree of foreclosure of the mortgage, and taking the property in full payment of the debt, the plaintiff made its conclusive election to affirm. Third. By taking the property in satisfaction of the debt and releasing the debtor from all personal liability after notice, of the alleged fraud, the plaintiff has by its voluntary act disabled itself from restoring the status quo.

The judgment is- — Affirmed.

Faville, C. J., and Eaians and Albert, JJ., concur.